In a surprise ruling that handed a victory to organized labor, the California Court of Appeal found that the administration lacks the authority to spend state funds to implement cuts in the so-called prevailing wage. The court, meeting in San Francisco, rebuffed the Wilson administration in a 3-0 vote.

The decision, combined with a separate, narrower court ruling on Friday, puts on indefinite hold the administration's move to save $200 million a year by reducing the prevailing wage paid to as many as 250,000 construction workers. The state was to begin phasing in the wage cuts in two days.

In its ruling, the Court of Appeal reversed a San Francisco Superior Court decision in February that upheld the administration's plans. The lower court had rejected union arguments that the administration could not tap general state funds to implement the cuts because the state Legislature last year rejected a specific $1.3-million appropriation requested for that purpose by the governor.

Stephen P. Berzon, a union lawyer, called Friday's reversal in favor of organized labor "a great victory for the building trades and for the California Legislature."

Berzon said the wage reductions sought by the Wilson administration "would be devastating for construction workers trying to maintain a decent standard of living."

But Rick Rice, a spokesman for the Wilson administration's Department of Industrial Relations, called the ruling a serious blow and said it would be appealed to the California Supreme Court. He said that the administration believes it has the authority to use general funds to conduct wage surveys and to do other work to implement the cuts because the Legislature took no specific action to delete that funding.

In a separate ruling, a Sacramento Superior Court judge issued a temporary restraining order barring the administration from going ahead with the prevailing wage cuts. In that case, labor unions and union employers are challenging the Wilson administration's authority to reduce the prevailing wage, arguing that only the California Legislation can take such action.

The Wilson administration has claimed that its plans to reduce the construction industry's prevailing wage would bring California's regulations in line with those of the federal government and most other states. But union officials have fought the effort vigorously, claiming it would chip away at a fundamental workplace protection that assures construction workers of receiving decent pay.

The current system in California ties wages on public works projects to the most common pay level in an area--enabling the union pay scale to prevail even if only a minority of workers are represented by organized labor in a particular region.

Under the Wilson proposal, wages could be reduced in many cases because they would be pegged to what the majority of construction workers in a given area earn or to a "weighted average" of workers' wages.